India Makes Country of Origin Label Mandatory for Online Government Marketplace

Indian traders burn Chinese products and a poster president Xi Jinping during a protest in New Delhi, India, Monday, June 22, 2020. China said the Galwan Valley high up in the Himalayan border region where Chinese and Indian troops engaged in a deadly brawl this week falls entirely within China, …
AP Photo/Manish Swarup

India’s Ministry of Commerce and Industry issued an order on Tuesday making it mandatory for all sellers to indicate the country of origin for products registered on GeM, the Government e-Marketplace. The order was presented as part of the “Make in India” initiative, but was more bluntly interpreted as “not made in China.”

Indian officials, trade organizations, and consumers are eager to “Boycott China” after a violent border clash between Indian and Chinese troops last week, but the movement has run afoul of China’s dominant position in several key Indian markets. There just are not many cost-effective Indian-made alternatives to some popular Chinese-made consumer goods, notably including high-tech items such as smartphones, and some purportedly local products are actually made with Chinese components.

“India’s dependence on China is huge. India’s largest imports come from China, more than 17 percent and worth $88 billion. In contrast, our exports are only around $30 billion. What is even more worrying is that while we import value-added items like electronics and machinery, we export mostly raw materials and low-value items,” Indian blogger Arre Bench noted on Tuesday, pointing out that it can be difficult for boycott-minded Indian consumers to tell which products are Chinese.

India’s GeM is the online procurement portal for government agencies. All Indian government agencies have been instructed to make as many purchases as possible through GeM, an initiative that is expected to increase the online portal’s sales volume from $7 billion to $40 billion over the next year. Millions of items are for sale on the electronic marketplace, as well as services such as transportation and waste disposal.

Tuesday’s order from the Ministry of Commerce and Industry requires all sellers to specify the country of origin for items they put on the marketplace, as well as indicating the percentage of local content for products that are hybrids of imported components and local manufacture.

“With this new feature, now the country of origin as well as the local content percentage are visible in the marketplace for all items. More importantly, the Make in India filter has now been enabled on the portal. Buyers can choose to buy only those products that meet the minimum 50 percent local content criteria,” explained GeM CEO Talleen Kumar.

Indian government agencies have been instructed to give their “maximum preference” to providers who can guarantee at least 50 percent local content in their goods and services. The Ministry of Commerce has established several “classes” of value for local content requirements, with the 50 percent threshold applying to the most expensive purchases.

Although the new GeM regulations do not explicitly target China, officials told Reuters that identifying Chinese products was the “main objective” of the order. 

“The decision will encourage domestic producers, as many domestic sellers were so far importing goods from China and selling through this portal,” one of Reuters’ sources in the Indian government said.

Supporters of the Boycott China movement praised the labeling requirements and urged the government to “extend the rules to all platforms so that consumers get a choice not to buy Chinese products,” as one activist put it. Some Indian trade groups are also pushing for mandatory country-of-origin labels on private e-commerce platforms, including the prominent Confederation of All India Traders (CAIT).

“The CAIT raised this demand on 15th June to the Commerce Minister. in the wake of the fact that mostly all e-commerce companies are selling Chinese goods in large percentages on their portals and in absence of Country of Origin provision, the customers are unaware about the origin of the Country which certainly influences the choice of the consumers,” CAIT Secretary-General Praveen Khandelwal said on Tuesday.

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